Press Release
October 7, 2011

Enrile: Trust fund to provide financial protection to coconut farmers

Senate President Juan Ponce Enrile this week filed a bill seeking to establish the Coconut Farmers Trust Fund, intended to provide adequate financial protection to the coconut industry and its workers.

Senate Bill No. 2978, also known as the Coconut Farmer's Trust Fund Act of 2011, seeks to declare the Coconut Industry Investment Fund (CIIF) Oil Mills Group (OMG) block of shares in San Miguel Corporation (SMC) as well as all other properties and/or assets emanating from all coco levy recovered assets, as public funds, and placing them in a Coconut Farmers Trust Fund for the financing of programs for the benefit of the coconut farmers, for increased productivity of the coconut industry, and for the development of coconut-based enterprises.

According to Section 6 of the bill, the Trust Fund, which shall be perpetually maintained and preserved, shall be composed of the CIIF SMC Shares consisting of approximately 27 percent of the outstanding capital stock of SMC, including all accrued cash and stock dividends, including all properties or assets emanating from all coco levy recovered assets.

"The most controversial investment of the coco levy is the acquisition of the 33.133 Million common shares in San Miguel Corporation (SMC), representing 27 percent share," Enrile said, adding that the "27 percent share, once this bill is enacted into law, will form part of the initial capital of the fund."

To ensure that the benefits and gains arising out of the Trust Fund directly go to, and are received by the small coconut farmers and farm workers, a Coconut Farmers Trust Fund Committee will be created for the proper administration, disposition and utilization of the earnings and incomes of the Fund of the trust fund, the bill said.

According to Enrile, the Philippines used to be one of the largest producers of coconut products in the world. About 25 percent of cultivated land was planted to coconut trees, and it is estimated that between 25 percent and 33 percent of the population was at least partly dependent on the industry for their livelihood, Enrile added. However, for the same period coconut oil prices in the world market also increased, prompting the government to collect a levy from coconut farmers to stabilize retail prices of coconut-based consumer products at that time, he further said.

"The coco levy funds were intended to subsidize the sale of coconut-based products and to finance various coconut planting and replanting programs, research, extension and credit services programs, establishment of model plantations including the propagation of hybrids, and acquisition of coconut related industries and the operations of such industries, all for the benefit of the coconut industry in general and coconut farmers in the country in particular," explained Enrile.

These reforms, Enrile said, were never completely implemented and the benefits were not fully enjoyed by coconut farmers. The coco levy funds were invested supposedly on behalf of coconut farmers but were allegedly redirected to investments that effectuated their misuse, he added.

On May 7, 2004, the Sandiganbayan had already rendered a "partial summary judgment" declaring the shares of San Miguel Corporation, the CIIF OMG, and 14 CIIF holding companies as owned by the government "in trust for all the coconut famers."

"This judgment has not been implemented pending final determination of the case involving the said assets. Until the final resolution of the case, farmers will be continually denied of the money and benefits denied to them," Enrile said.

"It is imperative that the government undertake the necessary steps to prevent the dissipation and assure the preservation and conservation of these funds for the benefit of the coconut farmers of the country," Enrile added.

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